FHCE 3200 Exam 2 UPDATED ACTUAL
Exam Questions and CORECT Answers
Are financial obligations imposed on individuals and businesses by government entities -
CORRECT ANSWER Taxes
Governments use taxes to - CORRECT ANSWER - build infrastructure
- provide social welfare
- pay for national defense
- provide other public services
- encourage economic activity
Most working adults will pay the following types of taxes - CORRECT ANSWER - federal
income taxes
- state income taxes
- payroll taxes
- sales taxes
- property taxes
TVM Question: What is the future value of $500 a month over 30 years earning a 7% annual rate
of return? - CORRECT ANSWER $609,985.50
Is the total amount earned before taxes and other deductions - CORRECT ANSWER gross
pay
are taken out of an employee's pay by the employer - CORRECT ANSWER withholdings
Withholdings can be - CORRECT ANSWER - mandated by law
- elected by employees
,Withholdings mandated by law - CORRECT ANSWER Federal, State, FICA
Withholdings elected by employees - CORRECT ANSWER Retirement, Health and Life
Insurance, Disability Insurance
Gross pay minus withholdings - CORRECT ANSWER net pay
The tax is used exclusively to pay for two government programs: Social Security and Medicare -
CORRECT ANSWER Federal Insurance Contributions Act (FICA)
Applies to earned income up to $137,700 (2019) - CORRECT ANSWER Social security
6.2% of Gross pay (half paid by employer; half paid by employee) - CORRECT
ANSWER Social Security
Applies to all earned income - CORRECT ANSWER Medicare
1.45% of Gross pay (half paid by employer; half paid by employee) - CORRECT
ANSWER Medicare
Are imposed by state and local governments, on the sale of certain goods and services, and are
paid when you buy something - CORRECT ANSWER Sales taxes
What two factors determine how much a sales tax is? - CORRECT ANSWER 1. Tax base
2. Tax rate
The amount of money that will be taxed, generally the cost of the item you purchase -
CORRECT ANSWER tax base
, Used to calculate the amount of tax owed and is generally denoted as a percentage rate, such as
7.5% - CORRECT ANSWER tax rate
Assessed on the value of property you own, such as your car or your home - CORRECT
ANSWER property tax
vary by state and are most often assessed by the city or county - CORRECT
ANSWER property tax
often referred to as ad valorem taxes - CORRECT ANSWER property tax
What does ad valorem taxes mean? - CORRECT ANSWER "according to value"
based on the current assessed value of the property - CORRECT ANSWER property tax
determined by each taxing authority (city or state) - CORRECT ANSWER property tax
Everyone pays the same tax rate - CORRECT ANSWER flat tax
everyone shares the tax burden in proportion to his or her income - CORRECT ANSWER flat
tax
low-income earners pay a larger proportion of their incomes in taxes relative to high-income
households - CORRECT ANSWER regressive tax
those with more income pay increasingly higher taxes - CORRECT ANSWER progressive tax
Exam Questions and CORECT Answers
Are financial obligations imposed on individuals and businesses by government entities -
CORRECT ANSWER Taxes
Governments use taxes to - CORRECT ANSWER - build infrastructure
- provide social welfare
- pay for national defense
- provide other public services
- encourage economic activity
Most working adults will pay the following types of taxes - CORRECT ANSWER - federal
income taxes
- state income taxes
- payroll taxes
- sales taxes
- property taxes
TVM Question: What is the future value of $500 a month over 30 years earning a 7% annual rate
of return? - CORRECT ANSWER $609,985.50
Is the total amount earned before taxes and other deductions - CORRECT ANSWER gross
pay
are taken out of an employee's pay by the employer - CORRECT ANSWER withholdings
Withholdings can be - CORRECT ANSWER - mandated by law
- elected by employees
,Withholdings mandated by law - CORRECT ANSWER Federal, State, FICA
Withholdings elected by employees - CORRECT ANSWER Retirement, Health and Life
Insurance, Disability Insurance
Gross pay minus withholdings - CORRECT ANSWER net pay
The tax is used exclusively to pay for two government programs: Social Security and Medicare -
CORRECT ANSWER Federal Insurance Contributions Act (FICA)
Applies to earned income up to $137,700 (2019) - CORRECT ANSWER Social security
6.2% of Gross pay (half paid by employer; half paid by employee) - CORRECT
ANSWER Social Security
Applies to all earned income - CORRECT ANSWER Medicare
1.45% of Gross pay (half paid by employer; half paid by employee) - CORRECT
ANSWER Medicare
Are imposed by state and local governments, on the sale of certain goods and services, and are
paid when you buy something - CORRECT ANSWER Sales taxes
What two factors determine how much a sales tax is? - CORRECT ANSWER 1. Tax base
2. Tax rate
The amount of money that will be taxed, generally the cost of the item you purchase -
CORRECT ANSWER tax base
, Used to calculate the amount of tax owed and is generally denoted as a percentage rate, such as
7.5% - CORRECT ANSWER tax rate
Assessed on the value of property you own, such as your car or your home - CORRECT
ANSWER property tax
vary by state and are most often assessed by the city or county - CORRECT
ANSWER property tax
often referred to as ad valorem taxes - CORRECT ANSWER property tax
What does ad valorem taxes mean? - CORRECT ANSWER "according to value"
based on the current assessed value of the property - CORRECT ANSWER property tax
determined by each taxing authority (city or state) - CORRECT ANSWER property tax
Everyone pays the same tax rate - CORRECT ANSWER flat tax
everyone shares the tax burden in proportion to his or her income - CORRECT ANSWER flat
tax
low-income earners pay a larger proportion of their incomes in taxes relative to high-income
households - CORRECT ANSWER regressive tax
those with more income pay increasingly higher taxes - CORRECT ANSWER progressive tax
